What does the growth of Red State America teach us about the course of the country?

The chart below shows that a 5 percent increase in the share of voters who supported President Obama was typically associated with a 1 percent lower growth rate over the decade. The most pro-Obama states in the continental United States — Vermont, Rhode Island and New York – grew by 2.8, 0.4 and 2.1 percent, respectively.

The states in the continental United States with the lowest Democratic share of the votes — Wyoming, Oklahoma and Utah — grew by 14.1, 8.7, and 23.8 percent, respectively. (Nevada is an outlier, but it doesn’t affect the relationship much because it sat in the center of the political spectrum in 2008.)
Economists are often reductionists, seeking simple rules that hold most of the time, rather than relishing in the glorious complexity of social phenomena, and so it is with urban growth.

Migrants move to different areas because of higher wages (often a reflection of higher productivity), quality of life (sunshine or good schools or low crime) and affordable housing, which typically comes from abundant supply.

Population growth rates alone do not distinguish among these different factors, but as I suggested two weeks ago, other data can inform the discussion.

If economic productivity were pushing population, then nominal wages should be high and rising — but they are not high in growing states. So a desire for more money is not what is pushing a worker to leave a high-wage area or job for an area with much lower earnings.

If quality of life were driving mobility, then growing areas should have the telltale sign of abundant amenities: high prices relative to income. A core idea in economics is that people pay for their pleasures, and if an area is great to live in, then people typically have to pay more for the privilege.

If housing supply were driving migration, we should expect the combination of low and declining relative housing prices and vast quantities of new housing. It would be hard to get low prices and high quantities of any commodity without abundant supply.

Two weeks ago, I argued that the population shift to the Sun Belt was driven more by lightly regulated housing supply than by high productivity, and I think that assertion is also true about the population shift to Republican states.

The second chart shows the relationship between per-capita personal income and voting for President Obama in 2008. Across states, Republicanism is associated with less, not more, income. This should not be interpreted as suggesting that Republican policies are bad (or good) for local prosperity, but it does make it hard to believe that migrants to Red States are being drawn by higher wages.

More generally, population isn’t moving to high-income areas. The four fastest-growth states were Nevada, Arizona, Utah and Idaho (in order of growth), all of which have earnings below the national average.

Our richest states, Connecticut, New Jersey and Massachusetts, grew by 4.9, 4.5 and 3.1 percent, respectively, far below the national average. People are not following the money.

Similarly, there is little reason to think that the move to Republican states is driven by amenities like the weather. Texas is hardly blessed with California’s moderate temperatures.

On average, Republican states have lower housing prices than Democratic states, even controlling for personal income. A state’s median housing price typically rose by 9 percent as the share voting for President Obama increased by 5 percent.

That negative connection between Republican vote shares and prices remains when we control for area income.

If Massachusetts and California had terrible economies or a terrible quality of life, then housing in these areas would be cheap. But these states have some of the most expensive real estate in the nation.

The ability to deliver abundant, affordable housing seems clearly to be a big element in explaining the high-growth states. Arizona and Nevada offer plenty of sunshine, right next door to California, at a fraction of the price. Despite a vast increase in population, these places remain cheap because they build so abundantly.

My interpretation of Red State growth is that Republican states have grown more quickly because building is easier in those states, primarily because of housing regulations. Republican states are less prone to restrict construction than places like California and Massachusetts, and as a result, high-quality housing is much cheaper.

There is a strange irony in this: more conservative places do a much better job in providing affordable housing for ordinary Americans than progressive states that are believed to care about affordable housing.

Progressive states, of course, have other objectives beyond affordable housing, and some involve blocking building. California environmentalists have been fighting construction for more than 40 years, and regulations in Massachusetts are barely less intrusive.

The latest Census results remind us that housing policies, determined often at the very micro level, are shaping the future of America.

Perhaps, those Democratic enemies of local growth might recognize that their policies have consequences, including reducing housing affordability and encouraging the flow of population to places like Texas.

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